Foreign Relations of the United States, 1969–1976, Volume IV, Foreign Assistance, International Development, Trade Policies, 1969–1972

355. Memorandum From the President’s Assistant for International Economic Affairs (Peterson) to the President’s Assistant for National Security Affairs (Kissinger)¹

Washington, January 28, 1972.

SUBJECT

• Travel and Trade with the PRC

I understand that you are about to send to the President the NSC Under Secretaries’ Committee Report on Travel and Trade with the PRC.² In this connection, I wanted to share with you some of my personal reactions which may be slightly different than what my staff is conveying to yours.

Generally, the problem with the USC Report is that it seems to have been formulated in a political vacuum without regard to the failure of the Chinese to respond positively in the economic arena. You and the President are in a position to make political decisions about this long list of options which, apart from the politics involved, strikes me as fairly sterile in most cases. More specifically, I favor moving on some minor issues at this time but oppose further relaxation of others.

For example, on economic and trade policy grounds, I would normally favor the removal of any discrimination between the treatment of the PRC and USSR in our regulations concerning direct bilateral trade or travel. However, since the major relaxation of last year³ has yet to move any direct trade, I would oppose the further relaxation of US trade regulations prior to the President’s China trip. My preference is to hold further liberalization against the possibility of later agreement or unilateral action (either during the trip or afterwards)⁴ indicating that the Chinese actually intend to expand direct trade. Before going the whole distance to remove the China differential, we should be assured that there will be tangible results which, among other things, will at least help justify running the alleged security risk which continues to bother Defense.

On the other issues under consideration (modification of remaining Foreign Assets Control Regulations and the controls on US firms abroad exporting foreign technology to the PRC), I favor the recommendations of the Under Secretaries’ Committee, i.e., that we abolish those controls which continue to require differential treatment by US subsidiaries abroad of exports to the PRC and USSR. I favor this mainly on the grounds that it would remove further irritants in our investment relations with friendly countries, which are more directly at issue here than are our relations with the PRC. Also, as a signal to the PRC of our intent to do something positive, removal of these controls prior to the President’s trip might be useful and could help set the stage for more meaningful results during or following the trip on trade and travel matters of direct US-PRC significance.

1. Source: National Archives, Nixon Presidential Materials, NSC Files, Subject Files, Box 402, Trade, Volume V 1/72-4/7/73. Secret. Attached to a February 2 memorandum from Holdridge to Kissinger; see footnote 1, Document 356.
2. Document 354.
3. Probably a reference to the measures announced on June 10, 1971; see Document 333.
4. President Nixon traveled to the People’s Republic of China February 17-28, 1972.